During the Summer of 2022, gas prices rose well over $5.00 per gallon. In response, President Biden called for a 3-month Federal Gas Tax Holiday, which would remove the $0.18 per gallon federal tax on gasoline. Under what circumstances would you expect consumers to reap the majority of the benefits from the removal of the gasoline tax? Under what circumstances would you expect gasoline retailers to reap the majority of the benefits from the removal of the gasoline tax?
During the Summer of 2022, gas prices rose well over $5.00 per gallon. In response, President Biden called for a 3-month Federal Gas Tax Holiday, which would remove the $0.18 per gallon federal tax on gasoline. Under what circumstances would you expect consumers to reap the majority of the benefits from the removal of the gasoline tax? Under what circumstances would you expect gasoline retailers to reap the majority of the benefits from the removal of the gasoline tax?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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During the Summer of 2022, gas prices rose well over $5.00 per gallon. In response, President Biden called for a 3-month Federal Gas Tax Holiday, which would remove the $0.18 per gallon federal tax on gasoline. Under what circumstances would you expect consumers to reap the majority of the benefits from the removal of the gasoline tax? Under what circumstances would you expect gasoline retailers to reap the majority of the benefits from the removal of the gasoline tax?
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An excise tax causes the supply curve to shift upward by the amount of the tax. Incidence of the tax is shared among both producers and consumers.
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